Yo Jan, you excited or what???<ggg>...he he
This says it better than i could....oh BTW MU is the HIGHEST short interest on the entire market!!!!!!!!!!!!!!!!!!! WOWIE!!!!
check this out.....
THE ONLINE INVESTOR - Feb 2 12:08pm
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Feb 02, 1998
Micron: Light at the End of the Tunnel
Make no mistake about it. Micron Technology (NYSE:MU - news) , which makes memory chips,
has been in a brutal dogfight for the last two years; it has the battle scars to prove it. In September
1995 the company's stock price stood as high as $94.75. Today, shares can be had for as little as
$35, a 63 percent discount. Plummeting dynamic random access memory (DRAM) prices over the
last couple of years -- due to a huge oversupply of chips -- have cut away at the company's balance
sheet, too.
In 1995, when the price of a 16-meg DRAM chip fetched as much as $60, Micron was making
money hand over fist. The company enjoyed earnings of nearly $850 million, on revenues of over
$3.6 billion. Today, however, with the price of a 16-meg chip hovering near its all-time low, the
company is in danger of losing money for the first time in nearly seven years. Still, don't count Micron
out just yet. A combination of stablizing DRAM prices, shrinking supply, and increased demand,
have analysts and shareholders looking up.
At NationsBanc Montgomery Securities' 15th Annual Technology Week investment conference,
held this past week, analysts were singing the praises of the semiconductor industry. After reaching
$2.25 -- its lowest price ever -- the 16-meg DRAM chip is beginning to make a comeback. And
that can only be good news for Micron, analysts said.
"We believe semiconductor stocks will outperform the S&P 500 in 1998," predicted Jonathan
Joseph, a senior research analyst at NationsBanc Montgomery, who covers several semiconductor
companies including Micron.
Joseph based his prediction on the correlation between semiconductor capital equipment spending --
which he believes will drop 5 percent from last year -- and stronger demand, something he contends
will be up 10 percent, suggesting a good year for the industry.
Also buoying his outlook is DRAM pricing. After a collapse of DRAM prices in late 1997, unit sales
are rising, while prices are firming. DRAM prices, according to Joseph, should continue to
strengthen throughout 1998.
Addressing the Asian economic outlook on the semiconductor industry, Joseph said that concerns
about slowing demand from Asia are real and that the Asian "flu" could spread to China and Japan.
On the positive side, though, tough economic conditions are making it difficult for the likes of Korean
DRAM makers Samsung, Hyundai Electronics Industries Co. and LG Semicon Co. These
companies are now slashing their capital spending due to their inability to borrow. As a result, they
won't be able to add capacity that might have put further pressure on commodity chip prices.
Unfortunately for Micron, Korea's woes have meant lower chip prices -- recently, especially.
Analysts said Korean chip companies (which have production costs of about $4.50 per unit) have
been selling inventory at almost any price to get the U.S. dollars they need. Notwithstanding this
additional capacity, though, there are signs now that it may be coming to an end, with chip prices on
the rebound.
Another contributing factor for the higher chip prices that's being bandied about is that Korean
chipmakers are shifting production into more 64-meg DRAM chips, which in some ways leaves the
16-meg market -- with its reduced supply -- wide-open for Micron. Of course, the same thing
happened to Micron in 1995, when other chip makers had transitioned away from the 4-meg
DRAM market and into the 16-meg market -- leaving Micron to feast. Micron, not detecting the sea
change that had taken place with consumers, was left behind and has struggled ever since. Skeptics
are now saying that Micron -- which does have a 64-meg chip but does not ship in volume -- could
be in danger of missing the boat again.
Still, Micron is welcoming the stablization of chip prices. It costs the chipmaker about $3 to produce
16-meg chips. Prices at or above $3, then, goes directly to the bottom line. If prices rise by 25 cents
for each of the 84 million DRAM chips that Micron produces each quarter, that would add $21
million in revenues to the company's balance sheet. If prices rise even more, well, you get the idea.
Indeed, it's this scenario that has likely boosted Micron's stock price almost 40 percent since the
beginning of the year.
Good news aside, there are potential worries that loom on the horizon for Micron. Steve Appleton,
Micron's CEO, who's battled Korean semiconductor makers for what seems an eternity, is heading
to Washington D.C. to testify before the U.S. House Banking Committee tomorrow. Appleton
blames the Korean chip makers for the glut in the memory-chip market, and is outraged that the
U.S. is helping with a multi-billion dollar bailout of the country. He is lobbying Congress to make
sure that none of the bailout money goes into funding DRAM plants the world doesn't need, and into
DRAM companies that sport debt-to-equity ratios of as high as 350 percent.
"Their companies mismanaged the business and now we're going to save them," Appleton said in an
interview two weeks ago. "Our tax dollars are being spent to put us out of a job."
With more of the chips making their way into computers, automobiles, appliances, digital video disk
players, and a host of memory-hungry Internet appliances coming out, demand isn't the problem for
Micron. No, Micron's troubles have to do with something that has plagued it for the last two years:
Memory Price. If Appleton can pursuade the U.S. government to adopt his way of thinking -- and
allow the Korean chipmakers to remain on the ropes -- Micron could soon have its day in the sun
again.
If, however, Korean chip makers are bailed out -- and low DRAM prices prevail -- none of the
16-meg DRAM makers will be smiling, especially Micron. Worse, if a shift into the 64-meg DRAM
market takes place soon, Micron could find itself behind the 8-ball again.
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